Why they can't guess the bottom.

March 5, 2009 | Fort Worth, Texas | Vetting explained

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Last updated: March 7, 2009

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I'm sick of the bottom pickers. I am not an expert. I'm just been a keen observer over the years and have learned some things. It was funny watching Bloomberg, CNBC, MSNBC, Fox Business news, reading the finance websites, and hearing the experts on the radio. It isn't funny anymore. They are costing people serious amounts of cash with their rhetoric and so called expert advice. To continue a previous report, http://www.ireport.com/docs/DOC-225194 I decided that this topic deserved its own thread. For those that don't know, it is impossible to pick the bottom. It cannot be done. Nobody knows where it is. Sure, some can get lucky and on an up day and say, "Hey that was the bottom." There is a difference between "A bottom" and "The bottom" I'm tired of being asked, "Hey, where is the bottom?" So for those few that drift by to read my speil I'll tell you how you know where the bottom is. Here it is.....hrmm hrmm...cough cough... When we are 2000 points up from the lowest point and steadily heading up on HEAVY volume then you can point to the lowest number and say "THERE IT IS!! THE BOTTOM!!" These little pops we get like yesterday, that sucked a few people in, happen in every bear market. The average market can only handle so many days in a row of selling before the sellers get fatigued. Then the bulls come in and mop up on what they feel are good deals and average down on their positions. (Lately there have been less and less buyers as trust has left the market) Sometimes the buyers force a short squeeze and cause certain stocks to pop up really high as unexperienced shorts see their gains slipping away on their short positions and scoop up their shares. I had two problems with yesterday. First was, that the Volume sucked. It was too low. Second was the fact most people were selling into the close. Those are both bad signs that things will be heading down the following day. Also many of these pops can be explained on triple witching days. This occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. This causes a lot of volatility and and a lot of volume. Don't confuse these days for heavy volume and a good sign. They don't count. Also, Options are constantly expiring. (Calls and Puts) So pay attention to your stock when buying or selling on the days those options expire. Remember nobody knows where the bottom is. It is impossible to know. The market is an emotion driven machine and as long as the mood is sour we will continue the trend down. For those of you stil interested there is hope in there are signs you can check to assure yourself we may be close or at a bottom. 1) Check the ^Vix (sometimes called the fear guage) Right now the ^Vix is at 50. Normal is 12. I'm not sure it is as accurate of a fear guage as it used to be. More of a surprise guage right now. Again, normal is 12. http://finance.yahoo.com/q?s=^vix 2) Check the PRO Short ETF (SKF) SKF has moved up huge and is at $242.85. The short market is having a hay day. This means stocks are heading down and heading down in a big way. http://finance.yahoo.com/q?s=skf&= Now just because SKF goes down, doesnt mean we have hit THE bottom or the Bear is over. Jan 2, 2009 SKF was around $100.00 and believe me there were bottom pickers on that day. http://www.foxbusiness.com/video-search/m/21727616/we-are-at-the-bottom-and-moving-up.htm Talk about being wrong. Jan 2 the DOW was at 9034 and we are 2400 points below that guys "bottom" 3) Volume. Not the control on your stereo but the amount of shares traded. 1 billion or so won't cut it. I believe there were 1.7 billion traded yesterday. That is NOT heavy volume. When all the money decides to leave the money markets, bonds, commodities, and shorts close their positions you will see record volume. And you will know. LIke 7 billion+ shares will be traded or more. And things wil be moving up super fast and high. We will get several days of 400-600+ pts up. 4) The news will be better and so will the outlook. All of these things can signal the end of a bear market. They dont mean the bear is over. They are just some key signals you can watch out for yourself. They are what I use. It works for me and somebody may have better or easier ways of knowing but for those that know nothing, these are at least a start. Quit listening to the "experts" that have been wrong over and over.

Posted in Assignment:
Are you afraid to invest in the stock market?

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